Irreparable Building Society Damage if 12 Month Mortgage Holiday Extension

Published / Last Updated on 14/05/2020

It is allegedly being floated in various government and regulatory circles that they may ask lenders to extend the mortgage holiday period by up to 12 months.

This will mean that many mortgage lenders will have little or no real revenue for a year. 

Building Societies are ‘mutual’ organisations, they are not limited companies.  They are owned by their members (savers and borrowers) and not by shareholders.  Building Societies cannot raise capital or borrow money in the same way that a limited company bank by selling shares, shares issues or borrowing money with assets put forward as collateral.


We suggest extending the mortgage holiday period could bankrupt many Building Societies.

With Bank of England base rates at just 0.1%pa and subsequent interest rates for savers and investors from banks and as low as 0% and 0.01%pa, Building Societies are going to struggle to attract new investment monies in.

In short, no money coming in from mortgage payments and no money coming in from savers means a massive strain, if not an impossible burden on many mutual organisations and we fear the worst for Building Societies if a mortgage holiday extension were allowed without government intervention via a support scheme.

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